Raute Oyj (HEL:RAUTE) Is Due To Pay A Dividend Of €0.80

Raute Oyj's (HEL:RAUTE) investors are due to receive a payment of €0.80 per share on 11th of April. This means the annual payment is 4.1% of the current stock price, which is above the average for the industry.

See our latest analysis for Raute Oyj

Raute Oyj's Distributions May Be Difficult To Sustain

If the payments aren't sustainable, a high yield for a few years won't matter that much. While Raute Oyj is not profitable, it is paying out less than 75% of its free cash flow, which means that there is plenty left over for reinvestment into the business. We generally think that cash flow is more important than accounting measures of profit, so we are fairly comfortable with the dividend at this level.

Recent, EPS has fallen by 39.9%, so this could continue over the next year. This means that the company will be unprofitable, but cash flows are more important when considering the dividend and as the current cash payout ratio is pretty healthy, we don't think there is too much reason to worry.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from €0.30 in 2012 to the most recent annual payment of €0.80. This means that it has been growing its distributions at 10% per annum over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

Dividend Growth Potential Is Shaky

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Raute Oyj's EPS has fallen by approximately 40% per year during the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

Raute Oyj's Dividend Doesn't Look Sustainable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. Overall, we don't think this company has the makings of a good income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 2 warning signs for Raute Oyj that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.

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